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United States v. Banco Cafetero Panama

decided: August 4, 1986.

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE
v.
BANCO CAFETERO PANAMA, BANCO CAFETERO COLON, DEFENDANTS-IN-REM-APPELLANTS



Interlocutory appeal from an order of the District Court for the Southern District of New York (Gerard L. Goettel, Judge) denying a motion to vacate in rem warrants lodged against defendants' bank accounts in proceedings to forfeit traceable proceeds of drug transactions. 608 F. Supp. 1394.

Lumbard, Oakes and Newman, Circuit Judges.

Author: Newman

JON O. NEWMAN, Circuit Judge:

This appeal concerns the Government's attempt to forfeit approximately $3 million in five bank accounts as "proceeds traceable" to narcotics transactions. 21 U.S.C. § 881(a)(6) (1982). Pursuant to 28 U.S.C. § 1292(b) (1982), Banco Cafetero Panama ("BC Panama") and its branch office, Banco Cafetero Colon ("BC Colon"), appeal from an interlocutory order of the District Court for the Southern District of New York (Gerard L. Goettel, Judge) denying a motion to vacate in rem warrants lodged against their bank accounts in forfeiture proceedings. The controlling questions of law framed by the District Court in certifying its ruling for appeal ask whether, under the circumstances of this case, a bank's account at a correspondent bank is forfeitable as proceeds of a drug transaction and whether due process of law requires a probable cause hearing immediately after the initiation of forfeiture proceedings. For reasons that follow, we answer the first question in the affirmative and the second in the negative, as did the District Court. We therefore affirm the District Court's order.

Before turning to the facts and legal issues, we need to make a brief clarification concerning the nature of the appeal. Section 1292(b) permits an interlocutory appeal to be taken, with the approval of a court of appeals, from an "order" of a district court when a district court determines that the order "involves a controlling question of law as to which there is substantial ground for difference of opinion" and that "an immediate appeal from the order may materially advance the ultimate termination of the litigation." Though it is helpful for a district court to frame the controlling questions of law that the order involves, as Judge Goettel did in this case, the statutory procedure specifies appeal of the order, rather than certification of the questions,*fn1 as the parties to this appeal appear to believe.

I. Background

The Government alleges that it has probable cause to believe that the funds at issue ultimately derive from the drug dealings of a criminal conspiracy led by Gilberto Rodriguez-Orejuela, President of First Interamericas Bank ("FIB").*fn2 The Rodriguez group allegedly operated a massive drug business in the United States and deposited the proceeds of this business in FIB accounts. Between August 1983 and March 1985, when the Panama National Banking Commission closed FIB, some $46 million were transferred by FIB into an account that BC Panama maintained at the Irving Trust Company ("Irving Trust") in New York City. Millions of dollars were subsequently transferred from this BC Panama account into accounts maintained by BC Panama at four other banks and into one account maintained by BC Colon at Irving Trust.

On March 8, 1985, the Government filed five complaints seeking forfeiture of the accounts of BC Panama and BC Colon at Irving Trust and of BC Panama's accounts at the four other banks.*fn3 Because one of these accounts has a negative balance, the Government's claim against it has become moot.*fn4 The Government represents that approximately $3 million remain in the other five accounts.

Upon the filing of the complaints, in rem warrants were issued for the arrest of the bank accounts pursuant to 21 U.S.C. § 881(b) and Rule C of the Supplemental Rules for Certain Admiralty and Maritime Claims. The Government executed the warrants, and the banks at which BC Panama and BC Colon had accounts immediately froze them. On March 13, 1985, appellants moved the District Court for an order vacating the in rem warrants. Appellants argued, among other things, that the accounts did not constitute a forfeitable res under 21 U.S.C. § 881(a)(6) and that failure to conduct an immediate probable cause hearing would constitute a denial of due process. The District Court rejected appellants' arguments and declined to vacate the warrants. See United States v. Banco Cafetero International, 608 F. Supp. 1394 (S.D.N.Y. 1985). The District Court granted appellants' motion to certify its ruling for interlocutory appeal, see United States v. Banco Cafetero International, 107 F.R.D. 361 (S.D.N.Y. 1985), and this Court accepted the appeal.

II. Traceable Proceeds

These forfeiture actions were brought pursuant to 21 U.S.C. § 881, which provides in pertinent part:

(a) The following shall be subject to forfeiture to the United States and no property right shall exist in them:

(6) All moneys, negotiable instruments, securities, or other things of value furnished or intended to be furnished by any person in exchange for a controlled substance in violation of this subchapter, all proceeds traceable to such an exchange, and all moneys, negotiable instruments, and securities used or intended to be used to facilitate any violation of this subchapter, except that no property shall be forfeited under this paragraph, to the extent of the interest of an owner, by reason of any act or omission established by that owner to have been committed or omitted without the knowledge or consent of that owner.

Appellants contend that, even if the Government's factual allegations regarding the Rodriguez conspiracy are true, the five seized accounts may not be considered "proceeds traceable" to narcotics ...


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